For most organizations, the stated goals of their loyalty programs are to drive customer engagement, increase purchase frequency and spend, and forge emotional bonds between the customers and the brand. Accomplishing these goals leads to improved customer retention and results in higher customer lifetime value. But, how do brands create the conditions to best accomplish these crucial objectives?
While rational benefits are often part of the core program value proposition, it’s really the emotional benefits that sustain customer loyalty. Rational benefits are often easily matched by competitors and promote transactional loyalties or mercenary purchase behaviors that stop as soon as the rational incentive is removed. In contrast, emotional benefits are often why customers stick with a brand, even when there are changes in pricing or despite the occasional service delivery issue. In general, truly loyal customers intentionally overlook your competitors.
“It all starts with understanding what emotionally resonates with your customers,” said Connexions Loyalty’s Chief Revenue Officer Chuck Christianson. “Brands need to focus on creating powerful moments – moments when customers emotionally connect with a brand.”
In fact, this sentiment is backed repeatedly by industry research. For example, highlighting an industry report by KPMG, Forbes notes that 80 percent of loyal customers prefer surprise and delight tactics versus traditional program benefits like special privileges or sales information. It’s the act of delighting these customers emotionally that differentiates the brand experience from those of the competitor.
To take this idea even further, the attempt to influence customer emotion extends well beyond promotional or program-related incentives. Organizations that weave emotion and experience into their brand and its touchpoints are driving customer lifetime value on a daily basis. For example, the design choices of Apple’s brick-and-mortar stores represent a clear attempt to influence customer emotion. Apple stores are designed to be particularly bright, expansive, modern and inviting destinations for customers. They drive customers to want to linger and learn more about its products. While the stores are a single channel, the collective influence of weaving this emotional thread through every customer touchpoint has big financial impacts. Apple stores drive customer willingness to pay more for and demonstrate greater loyalty towards its products and services as compared to competitor brands. This approach has been particularly successful with Millennials and will undoubtedly contribute to significantly higher customer lifetime values over the decades to come.
Bottom line: Keeping customers and getting them to spend more over their lifetime is about crafting an emotional and psychological experience that bonds them to your brand. And it may even create a few new customers when loyalists take it to the next level by proactively advocating for your brand with their friends, family and colleagues.
“By investing the necessary time to understand what makes your customers feel good,” said Christianson, “your customers will stay longer, spend more and talk more about their engagement with your brand.”